2. Understanding Blockchain Technology

Let's review what we have learned in this module.

Blockchain is a digital ledger that records a series of transactions or events in a secure, transparent, and decentralized way. It is called a "chain" because each block of data is linked to the previous one, forming a chain of blocks. Blockchain technology is a decentralized and distributed ledger that records transactions across a network of computers, using blocks containing a unique cryptographic hash, a timestamp, and a reference to the previous block. It is secure, tamper-proof, and maintained by a network of nodes. While related, blockchain technology and cryptocurrencies are separate concepts, with Bitcoin being the most well-known cryptocurrency.

Advantages of blockchain technology include its distributed nature, stability, and trustless system. However, there are also disadvantages such as the possibility of a 51% attack, the need for users to be responsible for their own security, and inefficiencies and storage issues.

A ledger is a digital record-keeping system distributed across a network of computers and devices, and each participant in the network has a copy of the ledger. The ledger is updated simultaneously whenever a new transaction or entry is made, and cryptographic algorithms ensure its security and integrity. Blockchain is a type of ledger used by cryptocurrencies, operating by creating a chain of linked and secured blocks containing transaction information. Other types of distributed ledgers, such as Hashgraph and Directed Acyclic Graph (DAG) technologies, also exist and have the potential to revolutionize many industries by providing secure, transparent, and decentralized solutions for various applications.

Cryptography and Consensus Mechanisms: The importance of consensus algorithms in a decentralized system is crucial for the functioning of cryptocurrencies and distributed ledgers. There are two main types of consensus algorithms: Proof of Work (PoW) and Proof of Stake (PoS). PoW relies on miners who validate transactions by solving complex mathematical problems, while PoS requires validators to hold a certain amount of cryptocurrency and bet on the block that will be selected. Common traits of consensus algorithms include the requirement for validators to provide a stake and the need for transparency to prevent cheating.